Help, I’m in the red!

1. The first thing to do if you’re sinking under a sea of debt is to face up to it. That means sitting down, alone or with your partner, and working out what you owe.

2. If you can’t cope then you can get online, telephone or face to face help for free. Try the Debt Advice Foundation, National Debtline or the Citizens Advice Bureau.

3. Don’t use debt reduction companies. If your debts are manageable, they will only do what you could do yourself for free and they’ll charge. The charities above will help if you have serious debts which need solutions such as an Individual Voluntary Arrangement (IVA) for debts over £7,000 (in Scotland the equivalent is a Trust Deed) or bankruptcy.

4. Prioritise your debts. Those that could affect your liberty come first such as council tax, income tax, national insurance and VAT, along with any child maintenance payments. Then deal with rent, mortgage and any loans secured against your home because if you fall behind with them, you face losing the roof over your head. Gas and electricity bills are also important to avoid being cut off.

5. If you are having trouble making payments then tell the company you owe money to. The earlier you do so, the more help they can offer. Mortgage companies, for example, might be able to suspend interest or extend the term of your loan. If you just miss mortgage payments without telling the lender you're in trouble, you do risk being repossessed.

6. Non-priority debts are credit and store card debts, personal loans and overdrafts. These are likely to be the most expensive debts in interest terms. So once you’ve sorted out repayment plans for your priority debts, pay off the most expensive non-priority debt first. And always make sure you pay at least the minimum payment on your credit card each month.

7. If you have a payday loan then be aware the interest rate is likely to be very high and your debt can grow rapidly if you don’t repay it quickly. Visit www.stepchange.org for lots of good advice on payday loans.

8. You might be able to cut the rate of interest you are paying on your card debts or loans by transferring to new deals. However, to get the best deals – such as 0% balance transfer cards – you will need a good credit record. See our guide to credit cards here.

9. Look at ways to maximise your income. Could you take on a lodger or more hours at work? Can you cut back on luxuries or walk instead of using public transport? Also check what government benefits you are entitled to and whether you are receiving them.

10. There’s no point in having savings if you have debts – particularly as interest rates on savings are so low. Use them to pay off your debts.